TRADE or employment contract: decide without creating a bogus self-employed worker

The doubt rarely arrives with the legal label already settled. It arrives like this: you need someone almost full time, they propose to invoice as self-employed, and someone at the table asks whether a TRADE “covers” the risk. The useful answer does not start with the contract template. It starts with how the work will actually be performed.

A TRADE is a self-employed worker who invoices habitually, personally, directly and predominantly to a client from whom they receive at least 75% of their income from work and economic or professional activities, without thereby losing their organisational autonomy. They are not an employee under another name or a shortcut to avoid the General Regime. Self-Employed Workers’ Statute, article 11. An employment contract, by contrast, arises when the person provides paid services for another’s account within the company’s organisation and direction. Workers’ Statute, article 1.1.

This guide covers Spain’s common labour and Social Security territory. It leaves out foral or special regimes that need their own analysis. It also does not replace judgement on a concrete file. A TRADE does not make self-employed a person who, in fact, provides services under another’s organisation and direction. Workers’ Statute, article 1.1. The information is general: it does not decide your registration, your contributions or the outcome of an inspection.

If you need the administrative sequence for a first hire, use the guide to hiring your first employee. If the problem is mistakes with someone already on the payroll, review first-employee hiring mistakes. Here the question is different: TRADE or employment contract, without manufacturing a bogus self-employed worker?

What the rule looks at before it looks at the PDF

The bogus self-employed worker is not a legal category with its own definition in the Official State Gazette. It is the everyday name for a concealed employment relationship: the person appears as self-employed or TRADE, but works under another’s organisation and direction. Classification turns on facts, not on the document label.

The Workers’ Statute applies to anyone who provides paid services for another’s account within another person’s organisation and direction. It also presumes a contract of employment between whoever provides a service for another’s account and within that organisation and whoever receives it in return for pay. The General Social Security Law refers to those same conditions to include the employee. Workers’ Statute, articles 1.1 and 8.1; LGSS, article 7.1.a).

In practice, that shifts the burden of proof. If the engagement looks like a job, calling the link “mercantile” or asking for RETA registration does not close the debate. You have to show real autonomy.

The General Treasury of Social Security describes a self-employed worker, for RETA purposes, as someone who habitually, personally and directly carries on an economic activity for profit, without being subject to a contract of employment. In that same frame it includes TRADEs regulated by Law 20/2007. TGSS, RETA affiliation. RETA registration proves formal classification; it does not prove that the relationship is not employment.

Economic dependence versus organisational dependence

This is where the mix-up usually happens. The TRADE exists precisely to cover intense economic dependence on a main client. The legislator wrote it carefully: that economic dependence does not imply organisational dependence or alienation. Preamble and article 11 of the Self-Employed Workers’ Statute.

Operational translation: invoicing almost everything to one company can be compatible with a TRADE. Receiving daily orders, using that company’s means like any other employee and being paid to be available is not. If you mix both, you do not “fix” the risk with a TRADE form.

What a real TRADE requires

Crossing the 75% line is not enough to be a TRADE. The Self-Employed Workers’ Statute requires meeting several conditions at once. Articles 11.1 and 11.2:

• Receive from one client at least 75% of income from employment returns and from economic or professional activities.
• Have no employees and not contract or subcontract the activity to third parties, save the narrow legal exceptions for work-life balance or substitution.
• Not perform the activity in an undifferentiated way with the client’s workers.
• Have their own productive and material infrastructure, necessary and independent of the client’s, when that is economically relevant in the activity.
• Carry on the activity under their own organisational criteria, without prejudice to the client’s technical instructions.
• Receive consideration linked to the result, as agreed, taking risk and venture.

Holders of premises open to the public are not TRADEs either, nor those who practise the profession jointly under a company or other admitted legal form. Article 11.3.

Use that list as a filter. If the person needs a company computer, a corporate email with internal hierarchy, shifts fixed by the client and a fixed monthly wage even when there is no deliverable, you are describing employment. If they bring their own tools, decide the work sequence, invoice by result and can refuse incompatible engagements, a TRADE starts to make sense provided the 75% test is also met.

Formalities that are not optional

The TRADE contract is always made in writing, records economic dependence on a single client and is registered with the SEPE. The TRADE has ten working days from signature to register and five working days to notify the client; if after fifteen working days there is no registration notice, the client must register it within another ten working days. Self-Employed Workers’ Statute, article 12; Royal Decree 197/2009, article 6. Registration is informative and is not public.

The SEPE Electronic Office describes the TAED Register and allows the telematic filing by the TRADE, the client or regulated professionals representing third parties. SEPE, TAED register. Registering badly or late does not “legalise” subordination. It only leaves an incomplete trail of a contract that, if the facts are employment, remains contestable.

If the contract is not made in writing or does not fix duration or a determined service, it is presumed indefinite unless proven otherwise. Article 12.4. That presumption protects the TRADE on the mercantile ground of the figure; it does not turn into a TRADE someone who fails article 11.

TRADE rights that do not turn the relationship into employment

The TRADE has an annual interruption of 18 working days, improvable by contract or professional-interest agreement, and a rest and working-time regime as agreed. Activity above what was agreed is voluntary and, without a professional-interest agreement, may not exceed 30% of the ordinary agreed time. Article 14.

TRADEs have compulsory cover for temporary incapacity and for accidents at work and occupational disease. LGSS, article 317. That cover strengthens protection for the dependent self-employed person; it does not prove the relationship is mercantile if the facts point to employment.

What choosing an employment contract implies

An employment contract places the person in the General Regime as an employee. The company takes on registration, prior enrolment before start, contributions, payroll, prevention, working-time records where required and communication of the contract to the public employment services. That is the ordinary architecture of employment. LGSS, article 7.1.a); Workers’ Statute, article 1.1.

If the person decides how, when and with what means to perform the engagement, bears the result and is not confused with the workforce, a TRADE can fit when the 75% test is also met. If the company fixes working time, gives day-to-day orders, supplies the main means and pays for availability, the coherent frame is the employment contract. Workers’ Statute, article 1.1.

The practical difference is not reduced to “cost”. With employment there is salary, holiday, employer contributions, possible severance and a collective agreement. With a TRADE there is an invoice, VAT when it applies, a RETA contribution borne by the self-employed person and a mercantile contract with its own termination grounds. Article 15 of the Self-Employed Workers’ Statute. Comparing the monthly RETA contribution with the full employment cost usually skews the decision: it omits reclassification risk.

Signs that the TRADE is forcing reality

None of these signs alone “proves” a bogus self-employed worker. Several together, sustained over time, usually describe subordination:

• Timetable or shifts fixed by the company with no real room for own organisation.
• Day-to-day orders on method, priorities and presence, beyond technical instructions for the engagement.
• Systematic use of the client’s means, premises or internal channels as if they were part of the workforce.
• Fixed monthly pay disconnected from deliverables or result.
• Replacing an employee who left with the same person, same function, now as self-employed.
• De facto exclusivity plus another’s organisation, beyond a simple concentration of income.

Read the last one carefully. A TRADE may concentrate income on one client. What they cannot do is dissolve into that client’s organisation. Article 11.2.b), d) and e).

What risk you take if you get it wrong

The Labour and Social Security Inspectorate may act on facts that constitute an offence in labour or Social Security matters. A formal complaint requires identification of the complainant and concrete facts; the body also keeps a mailbox against labour fraud as a communication distinct from a formal complaint. ITSS, how to report.

Under the LISOS, failing to request registration of workers who enter the company’s service is a serious offence, one for each worker affected. Communicating the deregistration of an employee so that the same activity continues through an improper registration in a self-employed regime is also a serious offence, one for each person affected. LISOS, articles 22.2 and 22.16.

For the offences in articles 22.2 and 22.16, the fine ranges, in the minimum degree, from 3,750 to 7,500 euros; in the medium degree, from 7,501 to 9,600 euros; and in the maximum degree, from 9,601 to 12,000 euros. LISOS, article 40.1.e) 1.º. Settlement reports for unpaid contributions may also be opened, with the surcharges and interest that apply under collection rules. This guide does not calculate your debt: the amount depends on the period, the bases and the file.

Reputational and operational cost also weighs. A reclassification forces rebuilding registrations, payrolls and sometimes relationships with clients or investors who ask about the real workforce. That is why the decision should be taken before the first invoice, not after the first inspection visit.

How to decide without documentary theatre

A sober method fits in five steps. It is not an official checklist; it is a way to order facts before you sign.

1. Describe the role or engagement on one page: what result is expected, who sets priorities, where the work happens, whose the means are and how pay works.
2. Cross that description with article 1.1 of the Workers’ Statute. If another’s organisation and direction fit, stop there: employment contract.
3. Only if there is no subordination, check the 75% test and the rest of article 11 of the Self-Employed Workers’ Statute, one by one.
4. If a TRADE fits, draft the written contract, register with the SEPE and document real autonomy: deliverables, own means, no imposed timetable.
5. Review at three and six months. If practice has drifted toward shifts, orders or workforce integration, correct with an employment contract; do not “reinforce” the mercantile paper.

That order avoids the most expensive mistake: choosing first the apparently cheaper figure and then trying to make the facts look like the PDF.

Borderline cases that deserve a brake

There are situations where haste pushes toward a TRADE and it is wise to slow down:

• Replacing an employee who has just left while keeping the same function, the same post and the same control.
• Covering a production gap with “self-employed” people who clock in, use the same internal system and receive the same instructions as the workforce.
• Demanding absolute exclusivity plus continuous presence at the client’s workplace, with fixed pay.
• Using a TRADE as an informal trial period before “deciding” whether there is a job.

In those scenarios, an employment contract — indefinite, temporary when a legal cause exists, or part-time if the working time is truly part-time — is usually the cleaner option. A TRADE is not designed to try someone out inside your organisation.

If the business is growing and the doubt moves from TRADE versus employment to the company structure itself, see when to move from self-employed to a company. They are different layers: first classify the relationship of the person who works; then decide the legal form of the business.

What to document if you choose TRADE

Keep the written contract, the TAED registration receipt, the notice to the client, invoices tied to deliverables and a short note on own means and technical instructions received. If there is a professional-interest agreement, keep that too. Articles 12 and 13.

That file does not immunise. It helps explain coherence. If tomorrow someone asks why there is no payroll, you should be able to show autonomy, result and risk, and not merely display a signed PDF.

If you choose employment, document the contract, prior registration, the employment-services notice, the applicable collective agreement and the working-time record where required. That folder is the mirror image: it proves you assumed the employment relationship from day one.

Limitations worth reading twice

This guide does not cover the sector detail of transport or insurance agents, where the Self-Employed Workers’ Statute provides specialties. It also does not predict whether the ITSS will visit a particular workplace or how a court will classify a narrative of facts. Collective agreements, equality plans or prevention duties may add employer obligations not developed here.

Nor does it turn the 75% figure into a magic switch. You can be below the threshold and be an ordinary self-employed person with several clients. You can be above it and still be an employee if autonomy is missing. The threshold opens the TRADE door; it does not close the employment door.

Finally, do not use this page as a legal opinion. If the relationship already exists, the amounts are high or an inspection is open, you need analysis of the real file with employment and Social Security advice. The cited rules let you decide with criteria; they do not replace proof of your facts.

Frequently asked questions

Does 75% of income from one client automatically make someone a TRADE?

No. That threshold is necessary, but the Self-Employed Workers’ Statute also requires meeting at the same time conditions of organisational autonomy, own infrastructure when it is relevant, consideration by result and risk, and not performing the activity in an undifferentiated way with the client’s workforce. Without those conditions, economic dependence is not enough. Article 11.

Does a mercantile contract or RETA registration prevent an employment relationship?

No. The Workers’ Statute presumes a contract of employment when someone provides a service for another’s account, within that person’s organisation and direction, in return for pay. The document label or the Social Security regime does not replace the classification of the facts. Articles 1.1 and 8.1; LGSS, article 7.1.a).

What happens if I sign a TRADE but the person works like any other employee?

TRADE registration does not cure a subordinate engagement. If there is another’s organisation and direction, the relationship may be reclassified as employment. That can open regularisation of registrations and contributions, settlement reports and penalties under the LISOS, plus possible employment claims. LISOS, articles 22.2, 22.16 and 40.1.e).

Who registers the TRADE contract and within what deadline?

It must be in writing. The TRADE registers it with the SEPE within ten working days of signature and notifies the client within five working days. If after fifteen working days the client has not received that registration notice, the client has another ten working days to register it. Royal Decree 197/2009, article 6.

When is an employment contract better than a TRADE?

When the company needs to integrate the person into its organisation: timetable or shifts, day-to-day orders, its own tools, fixed pay for time and no real business risk. In that scenario the employment contract is the coherent route; a TRADE is not a cheaper way to dress up subordination that already exists. Workers’ Statute, article 1.1; Self-Employed Workers’ Statute, article 11.

Next step

Before you sign, write on one page how the work will really be done and test it against article 1.1 of the Workers’ Statute and, only if there is no subordination, against article 11 of the Self-Employed Workers’ Statute. If the result is employment, prepare registration and an employment contract with the sequence in the first-hire guide. If the result is TRADE, put it in writing, register with the SEPE and keep proof of autonomy.

You can take that contrast to TaxFactory’s employment service or contact the team with the engagement description, before the contract draft. A concrete engagement needs data and its own analysis; this guide helps you not to choose the figure backwards.